All posts in Workforce Planning

Push for $15 Pay Raise Increases Employee “Relative Pay” Tensions


I know as compensation professionals we are always keeping up with industry trends and best practices.

In my role at eeStrategy, my goal is to apply those processes to help compensation professionals implement strategies that successfully achieve their employee engagement, retention and business goals.

I would like to share an article by The Wall Street Journal – Push for $15 Raises Pay – and Tensions.  It focuses on the “relative pay” and “pay injustice” tensions caused by the recent push to increase the minimum wage.  The focus of this article is mostly on retail, however, relative pay tensions are increasingly being heightened when employees find out that the new hires are coming on board at higher salaries . This can be  especially prevalent with critical skill employees and competitive situations make the primary focus current competitive/market driven compensation.

After reading it, I reflected on how our compensation strategy and solution focuses on ensuring that in these changing times employee satisfaction and engagement is not compromised.

I am sure the article will make you reflect upon your own workplace environment and relative pay issues.  I would appreciate hearing your thoughts.

How Your Business Can Go Further with Workforce Segmentation

There are two ends of the spectrum when it comes to compensation strategy.  There is the ‘peanut butter approach’ where everyone gets the same treatment – the same pay increases and benefits for the same job.  On the other end, there is completely personalized compensation in which each employee is analyzed and given a compensation package tailored to them.  The trick is working out where your organization’s compensation strategy should sit on that spectrum.

Until recently, technology hasn’t allowed organizations to reach the latter end of that spectrum in any effective way.  Today’s solutions allow businesses to have a completely bespoke compensation strategy for every person in the organization, if that’s the optimum approach.  The days of ‘one size fits all’ approaches is over.  Just as marketing systematically segments customers to target investments strategically, HR needs to segment talent to figure out what the optimum approach is and deploy human capital strategically.

We already segment the employee base in certain ways; most role categorization could be defined as segmentation – there is a difference between exempt and nonexempt, high-performance, engineers, salespeople, and managers.  Segmentation is being done to the extent that it can be done in an Excel spreadsheet, i.e. it’s being done far too broadly.  The broader your segments, the more you adhere to a ‘peanut butter approach’, the more waste you have in your organization.  In order to optimize our talent and compensation spend, we need more specific segments, and segments within segments.  We need to go further with how we define and understand our employee base.

For some companies, this means grouping employees according to their needs, and tailoring everything from terms of employment to incentives for different segments.  Often organizations use workforce segmentation to help identify critical sections of the workforce, aligned with company strategy, taking into account long-term talent trends, external market influences, and company plans.  In all cases, workforce segmentation empowers companies to improve financial performance, customer service and employee satisfaction, become more proactive, and develop a comprehensive understanding of their workforce.  Most importantly, it provides a critical link between business strategy and HR, resulting in an aligned workforce and business success.

For one fast food retail company, the goal was to get a better understanding of their employee’s needs.  The company needed to get an idea of what the market looked like and figure out the best way to make it work for their company.  Conducting surveys on lifestyles, behaviors, and attitudes – as they would do with their customers – the company was able to create a view of their workforce consisting of five different segments.  The segments included the social student (single, no kids), practical individualist (work is just a job to support other pursuits), transitional college graduate, community builder (inspired by the company’s charitable work) and the career enthusiast (a lifelong employee).  These segments did not fall into age groups, racial groups, or regional groups; rather they fell into lifestyle groups.  With this knowledge, HR leaders were able to adjust talent management tactics and processes to deliver the best results for their employees and for the organization.  The logic is simple: people are motivated by different factors, need different things, and have different interests and segmenting your organization along superficial demographic lines won’t tell you these things.  Each role must have an Employment Value Proposition that includes a mix of tangibles and intangibles, delivering a custom mix that motivates each group in the best way possible.

Workforce Segments

Using workforce segmentation to identify critical workforces is also vital.  Your organization has portions of the population that are pivotal to creating value and are vital to its success.  There are some jobs where resources and improvement are going to pay off a lot more and without which the organization would find itself at a strategic and operational risk.  Hence, significant efforts must be made to recruit, retain, and develop top performers, without neglecting other populations.  Segmenting and prioritizing can result in a 10% to 20% increase in your business impacts, without any additional budget.  It is a matter of segmenting and modelling the workforce to find these employee groups, allocating resources where they are most useful, and focusing on opportunities that can produce the greatest business results.

Mickey Mouse vs. Sweepers Grayscal

John Boudreau uses the example of Disney’s street sweepers to demonstrate how prioritization of critical workforces, and a focus on how they are managed, is vital to talent strategy.  Disney has obviously recognized the importance of Mickey Mouse, and their other characters, to their brand experience.  They are the most recognizable faces of the company.  Hence, Disney has controlled the role of Mickey Mouse to the point where the variation between good and bad performance is negligible.  Street Sweepers, on the other hand, have the potential to make a huge difference to the customer experience and the variation between a good sweeper and a bad sweeper is substantial.  When it comes to customer support, the street sweepers are the most accessible members of staff and it is they, not Mickey Mouse, that are directing people to the bathroom, identifying and resolving issues before they become issues.  The sweepers are faced with customer interaction on a day-by-day, minute-by-minute basis, and how they respond to guests can make a much bigger difference to customer experience than Mickey Mouse, even though Mickey is more important than the sweeper position, in terms of average value.

We don’t need to tell you that the advantages of workforce segmentation are clear.  Different employees do the same job different ways and different roles produce more value for different businesses.  The more you can understand our workforce and its contribution to business success, the more you can tailor the way you treat and motivate these workforces, the better off your organization will be.  Developing customized adaptable programs will benefit employees, customers and the company as a whole.  Workforce segmentation must go deeper and further than it currently does.  Rather than approaching workforce segmentation as simply a way to view current workforce demographics, use it as a method by which to comprehensively understand and address your organizations workforce and put in place strategies to optimize it.  Chances are that in your organization today, there is either a huge latent capacity you are missing, or a wastage of resources.  Look deep enough in your business with workforce segmentation and you’ll discover these opportunities to increase efficiency, optimize your workforce, and make a difference to your company and your employees.

Applying Military Principles to Win the War for Talent

Military leaders are trained to plan and execute strategies that win battles.  HR professionals face a similar battle; this one is enduring, experts predicted it 15 years ago, and it is in full swing for 2014.  Yet, HR professionals still find themselves unequipped to fight the war for talent.  Military strategists recognize that winning requires effective, adaptable processes for planning, intelligence, speed, and the right technologies to execute the resulting plan.  Your HR can gain similar competitive advantage through effective execution of those same four military principles.

Planning:  In our case, Workforce Planning.  With everything constantly changing: economic conditions, laws and regulations, market opportunities, etc., you will not win the war for talent with a workforce plan developed at the beginning of the year, and brought out only occasionally to check against goals.  With workforce plans made using accurate real-time data, you can adapt to your needs at any given time.  You are then much more likely to have the right people in the right place at the right time.  When it comes down to it, that’s what the war for talent is all about.

Management teams must practice continuous workforce planning utilizing relevant and truthful talent data.  Workforce data combined with external information, such as labor and salary market data, and data from operation systems, such as point-of-sale and CRM, enables HR professionals to answer the big talent planning questions more effectively.  The right HR system, a system in which you can combine data and analyze it directly, is the key to satisfying this goal.

Intelligence:  As USC’s John Boudreau pointed out, a major failing of many organizations is that they keep detailed records of material assets, yet lack the actionable intelligence to know when they are in danger of losing high-performing employees.  A HR system that is fine for housing workforce data but can’t engage employees for effective communication on performance or career goals isn’t the right system.  For business leaders to understand talent capabilities on a complex level across the workforce they need a system that intuitively takes into account all the possible anomalies and details.

After-action review:  The after-action review (AAR) is a fact-driven and effective process used to ensure the correction of errors and continuous improvement.  After every major initiative is launched and allowed to settle, key stakeholders must gather to give and receive feedback on the project.  Examples of this process include post-compensation planning, where the entire plan is introduced to management, and they are given the chance to provide feedback to the HR team, which HR integrates into a revised plan.

As soon as the review process is completed, there is another opportunity to review what worked and what can be improved upon.  Many organizations don’t do this effectively because it takes time, and most teams are busy with the next project.  Military organizations always plan this time into every project, and it is kept sacred.

Technology:  Technology is an enabler of intelligence.  The military has state of the art technology, which acts as a force multiplier, effectively augmenting teams.  Think of your HR technology as a force multiplier.  It should add capacity to your team.  It should free up time for better strategic thinking, planning, and after-action review.  It should provide you with mission critical data, heads-up displays, and aerial views of your business, your talent, and your competitor’s talent.  The challenge is to assemble the best technology available to you, whether you achieve that by building your own, buying more, or repurposing what you have.  The right technology is vital to executing your strategic processes effectively.

Lessons learned from the military can be applicable to your HR challenges, and with the right tools, technologies and enabling processes, you will be in a position to win against your relentless enemies in The Talent War.

If you are looking to weaponize your HR processes and systems, then contact us at eeStrategy so we can talk to you about our proven, unique solutions to help you win the fight.